9/16/2009 @ 6:00PM

Uncommonly Good Advice

As told to Forbes by Loren Nasser, co-founder, and Frank Priscaro, vice president of marketing.

I truly believe that most entrepreneurial start-ups are unique and that a “one-size-fits-all” approach rarely works. Even so, I have three key pieces of advice that I have found invaluable during the start and growth of VEXTEC that I think are worth passing on.

The first is to write a business plan at the very earliest stages of the start-up. You need a road map, a direction, and writing it down in the form of a plan forces you to think it through. Once it’s written down, you can share it with your co-founders and employees so everyone is on the same page.

The second piece of advice is, that business plan I told you to write will probably be wrong shortly after you think you’ve finished it, so be prepared to rewrite it (and often). I’ve spoken with people who have been connected with some of the largest technology start-ups that have launched since the advent of the personal computer, and rarely did the direction they started in turn out to be the direction they eventually prospered in. The early decisions about product direction, the market strategy, the pricing, etc., are hardly ever lucky enough to be exactly right out of the gate. A key theme to being a successful entrepreneur is having the ability to constantly re-assess and adjust.

The third piece of advice is that cash flow is king. Never, ever take your eye off cash flow, and forecast it as far into the future as possible. You may have the greatest idea in the history of commerce, but if you run out of the cash required to pay your people and keep the lights on, your great idea is history.

I don’t know that it’s uncommonly good advice, but it’s definitely hard-earned common sense: be patient, passionate and persistent, and get yourself with the best people you can.

At every one of my most successful start-ups, “That’ll never work,” “I don’t see a market for it” and “Company X already does that,” were the only things I ever heard the first dozen or so times I pitched the company. When I was younger, I used to take it as criticism and rethink my plans. Now I know it’s a sign this company is a hit. But if I hadn’t kept pitching beyond those first 12 or so, I never would have landed the first customer or investor and built the company.

That having been said, you should also surround yourself with the best people you can. This can be tough for entrepreneurs because we tend to have an “I can do it myself just as well” mentality that ends up being costly. But delegating to good, talented and productive people not only boosts your company’s bottom line, it also saves you years of worry lines and hair loss.

Access risk vs. reward; it is a marathon. Believe in your goals and trust your people. “iKnow” what we do is to contribute to the betterment of people, partners and self. Have a strong faith in ideas, your capabilities and yourself.

Believe beyond a shadow of a doubt that you have the ability to recognize and fulfill them.

“Do everything you ask of those you command.” “Do more than is required of you.”

Everybody comes up with great ideas, but before you act on them, heed the following advice: Don’t start without a “rainy-day” reserve fund equal to at least six months of living expenses. Obtain the buy-in of key family members and close friends before you start. Prepare for stress and uncertainty. Prepare to work very hard. Start with a realistic analysis of the time, work and capital that will be needed to achieve your goals; then multiply your estimate by four or five, and, if you are lucky, you just might be close. To succeed as an entrepreneur, learn to tune out all the daily noise, chatter and distractions that surround you and remain single-minded and intensely focused on your goal.

I have been told one too many times by so-called “experts” that you can’t love your business–I disagree! To be successful in your endeavor, you must have an unrelenting contagious passion for what you do surrounded by people who share your vision. Visualize your goals everyday and believe without a doubt they will come true, and it will!

Entrepreneurs are usually credited with being great risk takers. The reality is, we are terrible at analyzing risks! We are so committed to making something work against all odds, we don’t realize our product may not be accepted by the market. An entrepreneur seeking product feedback tends to think “80% of those asked loved it” is good enough. Not even close! To be successful, 95% of those you ask have to reply “incredible,” “I wish I had thought of that,” “the best I have ever seen.” With feedback like that, you might have a chance.

The other advice I have for entrepreneurs is that the Main Thing is to keep the Main Thing the Main Thing. This is directly from my father, who was a heck of an entrepreneur. It is remarkable how hard this is to stick to. Figure out what the Main Thing is, what is the critical number you have to pay attention to, the critical component? We get so overwhelmed as entrepreneurs because we are underfunded and overworked, that we often lose sight of the Main Thing. Don’t.

And finally, if your company is successful, it does not mean you are a good person. And if it fails, you are not a bad person. It is important to keep this in mind, because for the entire time you are an entrepreneur, every investor, customer, employee will look at you and tell you that you are your business.

“If you build it, they will come” only works in Field of Dreams. I learned from Ted Schlein at Kleiner Perkins to “build what you can sell, don’t sell what you can build.” When you are first getting started, your sales are based entirely on you and your relationships with clients, so try to get two or three of these customers to basically do a joint development project with you. Remember, if the dogs don’t eat the dog food, it doesn’t matter how good it is. Likewise, no matter how cool the technology is, somebody has to see value in it to buy it.

1. Communicate with your potential clients as early in your ventures launch as is realistically possible. Spend as much time building relationships with them and do so as early in the process as you can. In the end, they will be the deciders of your ventures success.

2. Be optimistic, motivational and emotionally tied to just about every facet of your business except one, the financial part. Finance in business is pragmatic, cold and emotionless. Treat it with the respect and clarity of thought it is due.

Culture: Only hire top talent, pay them more than market price, provide them income-doubling potential year-over-year and turn them into fanatics for your venture, your product and your leadership.

Burn out: push it hard, but avoid burn out at all costs. Find some balance that keeps you and your team running at full throttle without hitting the “wall of burnout.” Become an expert at leading people out of burn out and avoiding burnout before it happens.

Capital raise: choose your investors; do not take on any investor just because they are willing to invest in your venture. Repeat, don’t cash a check from any investor until you have performed due diligence on that investor, including a search for previous lawsuits against portfolio companies.

Finance: Always know your burn rate, your cash in hand and your days of runway. This should be burned in memory each morning.

Pain: understand that blockbuster products come from solutions to pain in the marketplace. Develop “aspirins” to pain, not “vitamins.” If you can align your solutions with a pain reliever and the timing of legislation, like hands-free cellphone laws for Yurtopia, then get ready for a potential blockbluster product.

There is no magic. Keep doing your best every single day. Tomorrow only comes after today; thus one step at a time! As I stated previously, everything is a sum of all the steps that have been taken and accumulated. No matter what you do, do the right thing as a human being!

Success requires passion, persistence and vision. Persistence is what brings it all together and, I believe, what ultimately closes the divide between success and failure. For Private Access, it’s all coming together now after more than 13 years. That’s persistence! Next comes passion. Follow your passion and associate yourself with the very best people you can find. When it’s your passion you’re pursuing, and the people you’re working with are truly world-class and focused on a worthy vision, then wow … there’s nothing in the world that I’ve found quite like it!

One of my favorite saying is “Do not let things reside in your mind rent-free.” This is the hardest lesson I have ever learned. I have one of those personalities that attempts to anticipate anything and everything that could possibly happen and plan for each and every contingency. Left unattended, this attribute can truly drive a rational person nuts.

Know how you are going to make money. It isn’t just enough to think something is a cool new idea. You have to know early exactly how you are going to monetize this new idea into products and services. You need to know how and when the budgets are allocated, what the price thresholds are for your potential clients and what needs to be delivered to ensure repeat business. If you can’t answer all those questions in detail before you start, then you’ll end wasting time and money–which are the two most precious resources any start-up has.

I think the real challenge is in understanding the commitment you are making, especially if you are coming from a “regular” job. Being an entrepreneur is much more of a lifestyle choice than it is career path, and because of that, it’s going to affect all aspects of your life, and you need to be prepared for it. Switching from sales at Company A to sales at Company B is one thing, but changing lifestyles is something very different–think switching from corporate America to becoming a monk or a professional athlete. How many hours a week is an athlete in training? Do you only count the workouts, or do you count the diet management, the mental preparation, and the time studying strategy? When you read about how an entrepreneur has to have “passion,” this is what they mean–it’s the integration of goal achievement with your daily life. When something is a fundamental part of your life and who you are, of course you have passion about it, and that’s why it’s so important. If you head down the path of entrepreneurship thinking of it as a career alternative, you are setting yourself up for sure failure. If you head down that path knowing it will fundamentally change your life, you are setting yourself up to succeed.

You should never hold back from pursuing a dream and also realize that you can never stop learning in order to achieve success. Passion and enthusiasm can bring you to any heights you wish to climb and therefore you should never be afraid of what you do not know, it is just another obstacle to overcome.

One of the most important lessons Greg and I learned as entrepreneurs is that it is not enough to just continue to do what works and what is profitable. The business environment around you, no matter what it is, is constantly shifting and changing. Always explore new ideas and concepts, even if your business is doing well. Get out of your comfort zone and apply what you have learned thus far to different problems. Test new ways of doing business. Connect with people outside of your field of expertise and learn about their challenges. Dont just try to grow your business by doing more of the same.

And do not ever stop networking. That was a critical part of us getting from concept to product and in reaching our funding and team expansion goals as quickly as we were able to.